FINS 5514 Week 4: Making Capital Investment Decisions1. You own a piece of land, which you purchased ten years ago at a price of $29,900. Three years ago, you were offered $38,000 for the land but refused the offer. You are now considering using this land to build a general store to service the local community. You have just had the land appraised so that you can use it as collateral for a construction loan. The appraisal value is $36,900. What value should you place on this land, which is currently debt-free, when you conduct your analysis of the proposed store? a. $0 b. $36,900 c. $38,000 d. $64,900 2. You are analyzing a proposed 3-year project. You expect to sell 12,000 units per year at an average selling price of $14.99 per unit. The initial cash outlay for fixed assets will be $78,000. These assets will be depreciated straight-line to a zero book value over the life of the project. Fixed costs are expected to be $61,234 and variable costs should be $5.89 per unit. What is the expected operating cash flow if the tax rate is 34 percent?

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